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Do You Believe in Better Business?

8/23/2019

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by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence

Does the word business carry positive or negative connotations for you?  My associations are affirmative ones, but for many people business carries significant baggage, perhaps from personal experience or from things they’ve read or heard.  Those impressions may be changing, though, thanks to a bold pronouncement by leaders of some of the world’s largest companies.
 
On August 19, 2019, 181 CEOs of the Business Roundtable, a Washington D.C.-based nonprofit comprised of “chief executive officers of America’s leading companies,” issued a Statement on the Purpose of a Corporation.
 
That news may not sound startling, but what is surprising is the new Statement’s focus on serving “all Americans”—an abrupt departure from what most people associate with business: making money for shareholders.  The new Roundtable Statement, in contrast, details the executives’ commitment to serving the needs of all corporate stakeholders by doing things like:
  • Delivering value to customers
  • Investing in employees
  • Dealing fairly and ethically with suppliers
  • Supporting communities
 
The men and women who endorsed the new Statement aren’t just any execs.  They’re the heads of many of the world’s largest and most successful corporations, for instance:
  • Jeff Bezos, Founder and Chief Executive Officer of Amazon
  • Tim Cook, CEO of Apple
  • Brian Moynihan, Chairman of the Board and CEO of Bank of America
  • James Hackett, President and CEO of Ford Motor Company
  • David Solomon, Chairman and CEO of The Goldman Sachs Group
  • Marilyn Hewson, Chair, President, and CEO of Lockheed Martin
  • Lisa Davis, CEO of Siemens Corporation USA
  • Doug McMillon, President and CEO of Walmart, Inc.
 
Several signatories supplemented the statement with their personal thoughts, for instance, Jamie Dimon, CEO of JPMorgan Chase & Co. and Chair of the Business Roundtable said:
“Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernized principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans.”
 
Similarly, Alex Gorsky, CEO and Chair of  Johnson & Johnson added:
“This new statement better reflects the way corporations can and should operate today.” “It affirms the essential role corporations can play in improving our society when CEOs are truly committed to meeting the needs of all stakeholders.” 
 
Those are nice sentiments.  Unfortunately, though, they fly in the face of what many have accused business of doing for decades if not millennia—profiting at any cost.  Moreover, some champions of capitalism have openly embraced that calloused approach to commerce, perhaps none more famously than economist Milton Friedman.  In a September 13, 1970 New York Times article, among other places, Friedman argued that business’s only social responsibility was to increase profit, i.e., to maximize shareholders’ return on investment.



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Beyond Friedman’s free markets manifesto, public cynicism about business has gained momentum thanks to a seemingly never-ending series of moral lapses and money grabs by certain businesspeople and companies such as Bernie Madoff, Enron, Arthur Andersen, Bear Stearns, Martha Stewart, Barclays, WorldCom, and Volkswagen.
 
It’s no surprise, therefore, that some are very critical of the new Business Roundtable Statement.  One such cynic is business columnist David Lazarus, who in a recent Los Angeles Times article maintained that the edict is nothing more than “corporate propaganda” put forth by conscience-stricken executives trying to save face amid growing business backlash.  Furthermore, Lazarus argues that the statement is conspicuously light on specifics, such as how exactly the companies purport to make all stakeholders their priority or what they might do to address the gross asymmetry in executive pay.
 
Lazarus is not the only one skeptical of the Roundtable Statement.  For his article, he interviewed several others who share his beliefs, including Kenneth Osgood, a history professor at Colorado School of Mines, who said “It seems pretty obvious that CEOs are trying to head off growing public pressure on a number of fronts, including how much they’re paid and taxing the rich.”
 
Echoing those sentiment was professor of public diplomacy at USC, Nicholas Cull, who said “There seems to be a concern among the CEOs that they’re becoming the bad guys.”  “This suggests that the business community is expecting blowback from their policies, and they’re trying to get ahead of it.”  Similarly, University of Alabama history professor Margaret Peacock simply called the Roundtable Statement “a clear and pretty heavy-handed attempt to obscure reality.”
 
Time will tell whether such strong criticism is deserved or if, instead, the signatories’ companies will live up to the commitments.  In the meantime, Lazarus and others critical of the Roundtable Statement should consider two key points about business:


1) Business benefits society.  Yes, certain businesspeople and companies have made mistakes, but that harm is far outweighed by the positive economic and social impact business has had and continues to have on local communities, nations, and the world.
 
So many people, including Lazarus, owe their livelihoods to businesses, so many consumers enjoy the products/services firms offer, and so many governments benefit from the tax revenue companies provide.


2) Responsible business strategies and tactics stem from a proper philosophy of business.  Just like we wouldn’t expect someone who has a distorted view of relationships to treat others decently, we shouldn't expect businesses to consistently treat stakeholders with respect unless they first make it their mission to do so.
 
The Business Roundtable Statement isn’t intended to be an A to Z blueprint for how exactly to increase employee compensation or build communities, but what it does propose is a very important prerequisite: an overarching goal that can serve as a guide for all other business activities, including marketing.
 
No businessperson is perfect, but when they hold each other accountable for positive impact, they’re often able to bring about good that they couldn’t achieve individually.  That’s the promise and potential of the Business Roundtable’s new ‘purpose statement,’ which also makes the  edict “Mindful Marketing.”


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Reading for Profit

8/9/2019

16 Comments

 
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by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence

How did you earn money as a kid?  Maybe you babysat, mowed lawns, or did chores around the house.  Did you ever get paid to read?  Probably not, but now one creative company rewards kids for reading while they get their haircut.
 
A haircut is a uniquely intimate interpersonal experience for someone of any age.  You sit still for a half hour or more, while a person you may not know very well stands inches away, repeatedly handling your most important body part—your head.
 
Beyond the physical experience, there’s the social dimension of a haircut.  Sitting so close to someone for that amount of time, it’s awkward not to talk.  However, even adults can find such chitchat challenging; for kids, it may seem impossible.  Most children don’t have advanced conversational skills, and they’re naturally short on life experience and  knowledge of topics that tend to be good conversation starters, e.g., current events, food, sports, etc.
 
Those aren’t the reasons, though, that City Cuts, a barbershop located in Kutztown, PA, pays children to read while they receive haircuts.  More comfortable kids may be a side benefit, but it wasn’t the main thing that motivated shop founder and owner Jon Escueta to start the ‘novel’ program.
 
Escueta immigrated from the Philippines when he was just eight years old.  Not knowing any English proved to be a formidable social barrier, but a caring teacher helped him overcome the obstacle by using a book about basketball to encourage him to read.
 
Escueta, now 32, employs the same strategy in his barbershop, where kids can read aloud a book of their choice to the person cutting their hair, and anyone else within earshot.  For every book kids read, they receive $3.
 
The benefits of reading are well known: greater knowledge, mental stimulation, vocabulary expansion, memory improvement, stronger analytical skills, improved concentration, etc.  However, all of those advantages can accrue to readers who sit alone and read silently to themselves.  Why, then, doesn’t City Cuts simply let kids borrow books to take home and read on their own time?
 
The reason is there are also significant benefits that can come from reading aloud in front of others.  On her website Tutoring Academy, Sharee Chapman identifies some of those positive outcomes, for instance:
- Improved diction and expression
- Enhanced visual memory and the ability to see images in one’s mind
- Better spelling from sounding out words, detecting syllables, and visually connecting words to sounds
- Great practice for public speaking
 

It’s the last benefit that aligns most closely with Escueta’s intent and reflects the way his program seems to be working.  For example, 8-year-old Connor, whose mother travels 20 minutes to take her two children to the shop, says that reading aloud has really helped him in the classroom.  He explains: "It [the reading time] made me speak up," so that "I am always raising my hand to get picked."
 
However, as much as Escueta may want to help, City Cuts isn’t a charity.  Without seeing its financial statements, one can imagine that a small barbershop, located in east-central Pennsylvania, doesn’t make money hand-over-fist.  So, how can it afford to pay both its barbers and its customers?
 
Fortunately, the program has gained considerable community buy-in.  City Cut’s customers and others donate both the books for the young readers and the funds to compensate them.  Also, this past January, Escueta started a GoFundMe account that has raised over $6,100 toward its $7,000 goal.
 
So, the reading program seems sustainable, but shouldn’t we be cautious about such corporate influence in children’s lives?
 
From banks to bakeries, all kinds of businesses want to make inroads with kids, not because children have much money to spend now but because they are the next generation of consumers.  Some big players have even used reading programs as a way of reaching kids.
 
For instance, Pizza Hut’s BOOK IT program has been rewarding kids for reading for the past three decades and still seems to be going strong.  Children enrolled in the program receive a certificate for a free one-topping Personal Pan Pizza, a prize, and a sticker for every month they reach their reading goal.
 

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Given that the program is “free,” those rewards for reading seem like a great deal.  Of course, most parents don’t drop their kid off at Pizza Hut and say, “Go in and eat your free Pizza,” i.e., one certificate likely draws the entire family into the restaurant for food and drink, resulting in a profitable tab for the company.
 
Pizza Hut also gains brand exposure in the ‘sacred’ learning environments of schools from BOOK IT-related items on which its logo appears such as posters, flyers, and the award certificates.  All that said, it’s reasonably to wonder if the benefits the company receives far outweigh the few pizzas the children earn.
 
Then again, BOOK IT does get kids to read.  Maybe that outcome justifies the corporate influence, but there’s also the risk that kids’ interest in books may begin and end with free food.  In other words, the extrinsic, physiological reward of pizza may overshadow the more important intrinsic, intellectual reasons for reading, mentioned above.
 
City Cut’s reading program, on the other hand, appears to avoid these risks.  Unlike pizzas, haircuts are necessities that children typically don’t crave and upon which families rarely overindulge.  Similarly, unlike problems inherent with connecting reading to eating, it’s hard to imagine an association between reading and haircuts that could negatively affect kids later in life.
 
In terms of corporate collateral, it would be naïve to think that City Cuts doesn’t profit from its reading program.  Like the mother who drives 20 minutes to take her children to the shop, there are probably other parents who go out of their way to involve their kids in City Cuts’ reading program.
 
However, whatever increased business City Cuts gains, it deserves.  By encouraging children to read aloud, Escueta and his colleagues offer young customers a uniquely valuable, developmental experience while extracting very reasonable value in return.      
 
It’s fine for companies to profit from their philanthropic efforts, provided that the community/company benefits are balanced.  City Cut’s reading program seems to strike that right ratio, which makes inspiring confidence in young customers “Mindful Marketing.”


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Subscribe to Mindful Matters blog.
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    David Hagenbuch,
    founder of
    Mindful Marketing    & author of Honorable Influence

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